Q3 2023 Intellicheck Inc Earnings Call
Speaker 1: Greetings and welcome to the IntelliCheck Q3-223 earnings call. At this time, all participants are in a listen only mode.
Greetings and welcome to the Infinity take QC 'twenty 'twenty earnings call.
At this time all participants are in a listen only mode.
Speaker 1: Every question and opposition will follow the formal presentation.
A brief question and answer session will follow the formal presentation.
Speaker 1: If anyone should require operator assistance during the conference, please raise a star and a zero on your telephone keypad. As a reminder, this conference.
If anyone should require operator assistance during the conference. Please press Star and then zero on your telephone keypad.
As a reminder, this conference is being recorded.
Speaker 1: It is now my pleasure to introduce your host, Kar Jackson. Thank you, you may begin.
It's now my pleasure to introduce your fish caught Jackson. Thank you you may begin.
Speaker 2: Thank you operator, good afternoon and thank you for joining us today for the Intel Object 3rd quarter 2023 earnings call. Before we get started I will take a few minutes to read the forward-looking statement. Certain statements from this conference call constitute forward-looking statements within the meaning of the Private Security's litigation reform act of 1995 as amended.
Thank you operator, good afternoon, and thank you for joining us today for the Intel check third quarter 2023 earnings call.
Before we get started I will take a few minutes to read the forward looking statement certain statements in this conference call constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 as amended.
Speaker 2: When you send this conference call, words such as will, believe, expect, anticipate, encourage, and similar expressions as they relate to the company Earth's management, as well as assumptions made by an information currently available to the company's management, identify four looking statements of the meaning of the Private Security's Litigation Reform Act of 1995.
When used in this conference call words, such as well believe expect anticipate encourage and similar expressions as they relate to the company Hertz management as well as assumptions made by and information currently available to the company's management identify forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
Speaker 2: These four looking statements are based on man's current expectations and beliefs about future events. As if any projection or forecast are inherently susceptible to uncertainty and changes in circumstances. And the company undertakes no obligation to and expressly disclaims any obligation to update or alter it for looking statements, whether resulting from such changes, new information, subsequent events or otherwise.
These forward looking statements are based on management's current expectations and beliefs about future events as with any projection or forecast. They are inherently susceptible to uncertainty and changes in circumstances and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward looking statements, whether resulting from such changes.
New information subsequent events or otherwise.
Speaker 2: Additional information concerning for looking statements is contained under the headings of State Harper's statement and risk factors elicits from time to time in the company's following that the Securities and Exchange Commission.
Additional information concerning forward looking statements is contained under the headings of Safe Harbor statement and risk factors listed from time to time in the company's filings with the Securities and Exchange Commission.
Speaker 2: David's made on today's call or as of today, November 8, 2023. Management will use the financial term adjusted to EVIDOT in today's call.
Statements made on today's call are as of today November eight 2023 management will use the financial term adjusted EBITDA in today's call.
Speaker 2: Please refer to the company's press release, issued this afternoon for further definition, reconciliation and context for the use of this term.
Please refer to the company's press release issued this afternoon for further definition reconciliation and context for the use of this term well.
Speaker 2: We will begin today's call with Brian Lewis and telechecks chief executive officer and then Jeff Fishman and telechecks, chief operating officer and chief financial officer who will discuss the Q3 2023 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors.
We will begin today's call with Brian Lewis Intel checks, Chief Executive Officer, and then Jackfish Merrill Lynch L. Jackson, Chief operating Officer, and Chief Financial Officer, who will discuss the Q3 2023 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors today's call will be limited to one hour and I will now I'll turn the call over to <unk>.
Speaker 2: Today's call will be limited to one hour and I will now turn the call over to Brian .
Brian.
Speaker 3: Thank you, Gar, and good afternoon, and thanks for joining us everyone today for our third quarter, 2023 earnings call. It was another solid quarter of year over year growth, with fast revenues up 17% versus the prior year quarter.
Thank you Guy and good afternoon, and thanks for joining US everyone today for our third quarter 2023 earnings call. It was another solid quarter of year over year growth with SaaS revenues up 17% versus the prior year quarter.
Speaker 3: And beginning today is called an update on some of the recent changes we have made as an organization. As I have shared with you before, I have continued to review organizational needs with an ongoing focus on staffing as a critical component in building our company and accelerating revenue growth. I continue to believe that key to our continued progress is putting the best people into operational positions that will enable us to drive growth and significant product evolution.
Beginning today's call with an update on some of the recent changes we have made as an organization.
Shared with you before I continue to review organizational needs with an ongoing focus on staffing is a critical component and building our company and accelerating revenue growth I continue to believe that's key to our continued progress is putting the best people into operational positions that will enable us to drive.
<unk> gross and significant product evolution.
Speaker 3: Since Jonathan Robbins came on board as our VP of engineering, he's made significant contributions and is engaged with our customers to really seek out what they need and address any issues or concerns that they might have.
As Jonathan Robbins came on board as our VP of engineering. He has made significant contributions and has engaged with our customers to really seek out what they need and address any issues or concerns that they might have.
Speaker 3: His efforts reflect our renewed focus on being proactive and partnering with our customers, recognizing that one size doesn't fit all. Without getting too deep into the technical details, here is just a few highlights regarding what Jonathan and his team have accomplished so far.
These efforts reflect our renewed focus on being proactive and partnering with our customers recognizing that one size doesn't fit all.
Without getting too deep into the technical details here are just a few highlights regarding with Jonathan and his team have accomplished so far.
Speaker 3: Recognizing that we need to reduce transaction abandonment, Jonathan Leddekeem and the redesign of our digital user interfaces to simplify the customer experience during ID validation.
Recognizing that we need to reduce transaction abandonment, Jonathan baggett team and the redesign of our did you don't user interfaces to simplify the customer experience journey I E validation.
Speaker 3: We believe that this reduction in abandonment will drive additional revenue, but more importantly, we'll help our clients on board additional clients faster and more efficiently.
We believe that this reduction in abandonment will drive additional revenue, but more importantly, it will help our clients onboard additional clients faster and more efficiently.
Speaker 3: The team has redesigned our API and servers to improve security and reliability. We are no longer dependent on only one cloud provider. We are now platform agnostic, and this provides a tremendous amount of flexibility that have been previously lacking. Again, this is something that we believe will benefit our customers and better position them to work more effectively. Additionally, this is expected to further reduce our platform costs in 2024.
The team has redesigned our API and servers to improve security and reliability. We are no longer dependent on only one cloud provider. We are now a platform agnostic and it provides a tremendous amount of flexibility flexibility they've been previously lacking.
Again this is something that we believe will benefit our customers and better position them to work more effectively. Additionally, this is expected to further reduce our platform costs in 2024.
Speaker 3: And Jonathan and the team have ramped up our data science and machine learning R&D with an eye toward creating new products and furthering our fraud detection expertise.
And Jonathan and the team have ramped up our data science and machine learning R&D with an eye toward creating new products and furthering our fraud detection expertise. We believe this will lead to additional revenue opportunities in the future and will further position Intel a check.
Speaker 3: We believe this will lead to additional revenue opportunities in the future and will further position the telecheck as cap of mind when it comes to fraud prevention.
Top of mind when it comes to fraud prevention.
Speaker 3: We believe that this is only the beginning. As a result of the rapid strides he has made and the product and customer first deliverables, Jonathan was promoted to the role of Chief Technology Officer in September .
We believe that this is only the beginning as a result of the rapid strides he has made and the product and customer first deliverables, Jonathan was promoted to the role of Chief Technology Officer in September.
Following up on point number three we believe that there is a significant opportunity to monetize the vast amount of data that we collect on fraud, including when where and how it is occurring.
Speaker 3: Following up on point number three, we believe that there is a significant opportunity to monetize the vast amount of data that we collect on fraud, including when, where, and how it is occurring.
Speaker 3: We believe that this data will be beneficial to many different organizations.
We believe that this data will be beneficial to many different organizations with that in mind during the quarter steps were taken to advance our efforts. We are augmenting this team of data scientists and we anticipate that.
Speaker 3: With that in mind, during the quarter, steps were taken to advance our efforts. You're augmenting your team with data scientists and we anticipate that that will start to be a revenue contributor in 2024.
We will start to be a revenue contributor in 2024.
Speaker 3: It is important to note, however, that this data harvesting goes beyond monetary benefit. We believe this also solidifies our position as experts and thought leaders in the field of fraud and positions us to be an industry leader and speaker on fraud with exclusive material.
It is important to note. However that this data harvesting goes beyond monetary benefit we believe it also solidifies our position as experts and thought leaders in the field of fraud and positions us to be an industry leader and speed garage fraught with exclusive material.
Speaker 3: During the quarter, we also announced the addition of David Jurgens to head up our channel partner program and he really hit the ground running.
During the quarter. We also announced the addition of David Jurgens T. I head up our channel partner program and he really hit the ground running.
Speaker 3: Jeff worked with David in the past at Silence and David was a standout there. He built out the successful channel program from scratch that was a significant contributor to their growth.
She has worked with David in the past its silence and David was a stand out there. He built out the successful channel program from scratch that was a significant contributor to their growth.
Speaker 3: We recognize that we are good at bringing in the age-restricted accounts on one end of the spectrum, and whales that take time on the other end of the spectrum. The channel program, we believe, will be good to augment mid-tier sales growth. Although David has only been here just over a month, he's off to a solid start, and we are very excited about the program he is putting in place.
We recognize that we are good at bringing the age restricted accounts on one end of the spectrum and wells that take time on the other end of the spectrum. The channel program. We believe will be a good to augment mid tier sales growth. Although David has only been here just over a month he's off to a solid start and we are very excited about.
The program he is putting in place.
Speaker 3: Looking now at our third quarter results, total revenues grew to $4,760,000 compared to $4,12,000, and SaaS revenue was a record $4,635,000 versus $3,970,000 when compared to the same period a year ago. And we continue the trend. Our trailing 12 months SaaS revenues have grown each month for the last 45 months.
Looking now at our third quarter results totaled.
Total revenues grew to $4 million $760000 compared to 4.012 million and SaaS revenue was a record $4 million $635000 versus $3.970 million when compared to the same period, a year ago and we continue the trend.
Our trailing 12 month SaaS revenues have grown each month for the last 45 months.
Speaker 3: Real estate transactions continue to be a market vertical with significant fraud. And as a result, we have expanded our market penetration to reach beyond title companies.
Real estate transactions continue to be a market vertical with significant fraud and a result, we have expanded our market penetration should reach beyond title companies.
Speaker 3: We have now gone live with the leading digital closing platform that is used by title, escrow, real estate, and mortgage lending professionals to transform home buying and selling into simple, secure, enjoyable experiences for millions of homeowners each year.
We have now gone live with a leading digital closing platform that is used by title escrow real estate and mortgage lending professionals to transform home buying and selling into a simple secure enjoyable experiences vermilions homeowners each year there.
Speaker 3: Their platform provides a system of record for the real estate settlement ecosystem through a suite of workflow, accounting, reporting, and collaboration products, as well as its expansive product and service integration.
<unk> platform provides a system of record for the real estate settlement ecosystem through a suite of workflow accounting reporting and collaboration products as well as its expansive product and service integrations.
Speaker 3: We believe that it's not only protects customers against fraud and transactions that can be very large and involves significant amounts of money, but also marks an important milestone because it further embeds IntelliCheck into the real estate transaction ecosystem.
We believe that this not only protecting customers against fraud and transactions that could be very large and they bought significant amounts of money, but also marks an important milestone because further embeds Intel a check into the real estate transaction ecosystem.
Speaker 3: We continue to see growth in the title business. The nation's second largest title company started to pay pilot that launched in mid-October. Initially, they purchased a bucket of 50,000 transactions for their use in the Florida and Georgia market.
We continue to see growth in entitled business. The nation's second largest title companies started a paid pilot that launched in mid October initially they purchased that bucket of 50000 transactions for their use in the Florida and Georgia markets.
Speaker 3: Looking at our continued efforts in the banking market vertical, the two regional banks that we have been talking about continue to make progress toward revenue generation.
Looking at our continued efforts in the banking market vertical the two regional banks that we have been talking about continue to make progress toward revenue generation.
Speaker 3: Both of the pilots we have spoken about with the two regional banks totaling over 4,000 branches are off to solid starts. Although this took longer than originally anticipated, through Jonathan's team work on the technology side, we have evolved the product to better fit their needs. As a result, we are seeing good velocity of use during this pilot period and extended use cases for both banks are anticipated.
Both of the pilots we have spoken about with the two regional banks totaling over 4000 branches are off to solid starts. Although this took longer than originally anticipated during jonathan's team work on the technology side, we have evolved the product to better fit their needs. As a result, we are seeing good velocity of used during the pilot period.
And extended use cases for both banks are anticipated.
Speaker 3: In the automobile vehicle market, we are working with the 2700 unit auto dealership on some requested technology updates. Jonathan and his team have updated the front end capture to where better fit their workflow. We continue to believe that the auto market is significantly under penetrated and that is another market where it doesn't take much fraud to add up to significant losses.
In the automobile market, we are working with the 2700 unit auto dealership on some requested technology updates Jonathan and his team had the updated that Friday and capture to work better fit their workflow. We continue to believe that the auto market is significantly underpenetrated and that is another market where it doesn't.
Take much fraud to add up to significant losses.
Speaker 3: The manufacturer that this company is working with was hit very hard by the UAW strike, so the launch has been slower than both anticipated, but the technology is now being evaluated by two additional automotive manufacturers in their network.
The manufacturer that his company is working which was hit very hard by the UAW strike. So the launch has been slower than both anticipated, but the technology is now being evaluated by two additional automotive manufacturers.
In their networks.
Speaker 3: On the age-restricted front, we are continuing to build on the terrific success we had in Charleston, South Carolina. The extensive positive media coverage has reflected how well our public-private sector partnership has been, and it continues to receive high marks from the mayor, the city council, and the business community.
On the age restricted right. We are continuing to build on the terrific success, we had in Charleston, South Carolina. The extensive positive media coverage has reflected how well our public private sector partnership has been and it continues to receive high marks from the mayor the city Council and the business community.
Speaker 3: We believe this program can be replicated in other communities struggling with the underage access issue that have had a negative economic and reputational impact on their communities. Right now, we are in discussions with the city of Clemson, South Carolina. The potential program was discussed at the recent city council meeting and we are looking forward to seeing how their deliberations evolve.
We believe this program can be replicated in other communities struggling with the under age access issue that have had a negative economic and reputational impact on their communities.
Right now we are in discussions with the city of clumps in South Carolina. The potential program was discussed at the recent city Council meeting and we're looking forward to seeing how their deliberations to vault.
Speaker 3: On another note on our successful partnership with Charleston, this program is being recognized for its innovative approach to addressing underage access to alcohol. I was honored to be a featured speaker at the Pennsylvania Liquor Control Board 2023 Education Conference where speakers' roles are highly coveted. A highlight for me was when a Pennsylvania Liquor Control Board officer spoke up during the Q&A. She offered to demo our technology saying they use it and love it.
And another note on our successful partnership with Charleston. This program I think it's being recognized for its innovative approach to addressing underage access to alcohol I was honored to be a feature speaker at the Pennsylvania Liquor control Board 2023 Education conference where speakers roles are highly coveted.
A highlight for me was when a Pennsylvania liquor control Board officers spoke up during the Q&A. She offered to demo our technology, saying they use it and love it.
Speaker 3: We are also continuing to make strides with the branding agency. We believe that raising awareness about IntelliCheck will help drive interest and leads in markets where we know accuracy is important because the stakes are so high.
We are also continuing to make strides with the branding agency, we believe that raising awareness about Intel it check will help drive interest and leaves in markets, where we know accuracy is important because the stakes are so high.
Speaker 3: So as you can see, we're making significant progress on a number of fronts that we believe will accelerate our growth in 2024. I'll now turn the call over to Jeff.
So as you can see we're making significant progress on a number of slides that we believe will accelerate our growth in 2024.
I'll now turn the call over to Jack.
Thank you Brian I'm pleased with the continued progress we've been making across all levels of the organization as we continue our efforts to redistribute our spend and investment into the areas that will fuel our future growth and profitability.
Speaker 4: Thank you, Brian . I'm pleased with the continued progress we have been making across all levels of the organization as we continue our efforts to redistribute our spend and investment into the areas that will fuel our future growth and profitability. Our third quarter revenues were 19 percent higher versus the prior year, and we continue to report a higher average price per scan versus the prior year, and we continued our progression towards adjusted even and neutral results for the year.
Third quarter revenues were 19% higher versus the prior year. We continue to report a higher average price per scan versus the prior year and we continued our progression towards adjusted EBITDA neutral results for the year.
Speaker 4: We are pleased to see the continued trailing 12-month growth progression in SAS revenues each month, which has been achieved consecutively for the last 45 months.
We are pleased to see the continued trailing 12 months gross progression and SaaS revenues each month, which has been achieved consecutively for the last 45 months.
Speaker 4: Continuing to cast a critical eye to the metrics of our SaaS revenue, it's encouraging to see an 18% increase in our average price per scan versus the prior year. As we've continued the right sizing of legacy accounts and have enforced internal disciplines on CPI increases. This is especially encouraging as it continues to speak to the testimony of the value realized by our customers, and that we continue to have pricing power.
Continuing to cast a critical eye to the metrics of our SaaS revenue, it's encouraging to see an 18% increase in our average price per scan versus the prior year.
Continue the right sizing of legacy accounts that have enforced internal disciplines on CPI increases.
This is especially encouraging as it continues to speak to the testament of the value realized by our customers and then we continue to have pricing power.
Speaker 4: We also continue to maintain our focus on operating expenses to ensure that we achieve the expected return on our investment for this area. Within the Q3 period, we made additional changes to the product group. We saw the promotion of Jonathan Robbins to CTO, as well as new hires to increase the skill set of the group across the engineering development and data science team.
We also continue to maintain our focus on operating expenses to ensure that we achieve the expected return on our investments in this area.
Within the Q3 period, we made additional changes to the product group, which saw the promotion of John Roberts of C. T O as well as new hires to increase the skill set of the group across the engineering development and data science teams.
Speaker 4: We are continuing the implementation of our channel program to be completed by the end of the year, which I will provide more details on later in my remarks. We expect this program to have a noticeable impact in our 2024 pipeline growth and bookings. We believe that the combination of the efforts discussed above will provide the necessary support for the sales team to drive increases in customer engagement, bookings, and revenues in 2024. Turning now to.
We're continuing the implementation of our channel program to be completed by the end of the year, which I will provide more details on later in my remarks, we expect this program to have a noticeable impact in our 'twenty 'twenty four pipeline growth and bookings.
Leave that the combination of the efforts discussed above will provide the necessary support for the sales team to drive increases in customer engagement bookings and revenues in 2024.
Turning now to our third quarter results.
Speaker 4: Total revenue for the third quarter of 2023 increased 18.7% to $4,760,000 compared to $4,012,000 in the same period of 2022.
Total revenue for the third quarter of 2023 increased 18.7% to $4 million 760000, compared to 4.012 million in the same period of 2022.
Speaker 4: Our SaaS revenue for the third quarter of 2023 grew 16.8% to 4,635,000 on 3,970,000 during the same period of 2022.
SaaS revenue for the third quarter of 2023 grew 16, 8% to $4 million 635003 million 970000 during the same period of 2022.
Speaker 4: Those properties of percentage of revenues was 91.0% for the third quarter of 2023 compared to 91.1% for the same period of 2022.
Gross profit as a percentage of revenues was 91.0% in the third quarter of 2023 compared to 91, 1% for the same period of 2022.
Speaker 4: As we discussed during the first quarter earnings call, we continue to model gross margin performance at a range of 90 to 91% while we continue to evolve our cloud resource infrastructure and may experience some cost overlap that could nominally impact our current gross margin performance. We will continue to scrutinize our cost structure to maintain the 90 to 91% gross margin level.
As we discussed during our first quarter earnings call. We continue to model gross margin performance at a range of 90% to 91%, while we continue to evolve our cloud resource infrastructure and they experienced some cost overlap that can nominally impact our current gross margin performance. We will continue to scrutinize our cost structure to maintain the 90 to 91.
Per site gross margin level.
Speaker 4: Operating expenses, which consist of selling, general and administrative, marketing, and research and development expenses increased $769,000 or 17.6% to $5,147,000 for the third quarter of 2023 compared to $4,378,000 for the same period of 2022. This increase was primarily driven by higher headcount related expenses, primarily across the R&D team related to the full accrual of severance related expenses.
Operating expenses, which consist of selling general and administrative marketing and research and development expenses increased 769000, or 17, 6% to 5.147 million for the third quarter of 2023 compared to 4.378 million for the same period of 2022.
This increase was primarily driven by higher headcount related expenses, primarily across the R&D team related to the full accrual of severance related expenses.
Speaker 4: excluding the $395,000 and severance related expenses, operating expenses increase 374,000 or 8.5%.
Excluding the $395000 in severance related expenses operating expenses increased 374000 or eight 5%.
Speaker 4: included with an operating expenses for the third quarters of 2023 and 2022 with 342,729,000 respectively of non-cash equity compensation expense.
Included within operating expenses for the third quarters of 2023 and 2022.
342000, 729000, respectively of noncash equity compensation expense, we expect our total noncash expenses will continue to decrease and comprise approximately 10% to 11% of our operating expenses are stock based compensation comprising 90% of that figure. This.
Speaker 4: We expect our total non-cash expenses will continue to decrease and comprise approximately 10 to 11% of our operating expenses, the stock-based compensation comprising 90% of that figure. This compares to our prior historical trend of 13 to 15%.
So our prior historical trend of 13% to 15%.
Speaker 4: We are continuing to implement aggressive expense reviews to ensure we are effectively allocating to the proper areas to support our growth initiatives. With respect to our Q3 operating expenses, we enacted personnel changes primarily within the R&D group. The resulted in a Q3 7s or crew of 395,000, which was fully accrued within the quarter. From an annualized perspective, we do not anticipate a reduction in our R&D expense as the broader product team was recalibrated during the Q3 period.
We are continuing to implement aggressive expense reviews to ensure we are effectively allocating into the property or is to support our growth initiatives with respect to our Q3 operating expenses, we enacted personnel changes primarily within the R&D group, resulting in a Q3 seven months accrual of 395000, which was fully accrued within the quarter.
From an annualized perspective, we do not anticipate a reduction in our R&D expense is the broader product team was re calibrated during the Q3 period.
Speaker 4: As we have discussed in our prior calls, we expect to continue realizing leverage in our operating expense structure. In this quarter, six point reduction in expenses adjusted for severance reflects our commitment to ensuring we scrutinize and properly allocate our spend.
As we have discussed in our prior calls we expect to continue realizing leverage in our operating expense structure and this quarter's six point reduction and expenses adjusted for severance reflects our commitment to ensuring we scrutinize them properly allocate our spend.
Speaker 4: Turning to net income and EBITDA. The company reported an improved net loss of 644,000 for the third quarter of 2023, compared to a net loss of 724,000 for the same period of 2022.
Turning to net income and EBITDA.
The company reported an improved net loss of 644000 for the third quarter of 2023 compared to a net loss of 724000 for the same period of 2022.
Speaker 4: Net loss per deluded sheriff in the third quarter of 2023 improved to three cents compared to the net loss per deluded sheriff four cents for the same period of 2022. Severance related expenses accounted for two cents of our EPS results.
Net loss per diluted share for the third quarter of 2023 improved to three <unk> compared to the net loss per diluted share of four cents for the same period of 2022 severance related expenses accounted for two cents of our E. P. S results.
Speaker 4: The weighted average diluted common shares were 19.3 million for the third quarter of 2023 compared to 18.9 million for the same period of 2022.
The weighted average diluted common shares for $19 3 million for the third quarter of 2023 compared to $18 9 million for the same period of 2022.
Speaker 4: We also continue to ensure we are properly managing our cash reserves, which generated 179,000, and interest income versus 7,000 in the same period of 2022.
We also continue to ensure we are properly managing our cash reserves, which generated 179000 in interest income versus 7000 in the same period of 2022.
Speaker 4: Adjusted even after the third quarter of 2023 was a loss of 271,000 compared to a gain of 75,000 for the same period of 2022. It's worth noting that 264,000 of the severance accrual was not adjusted out of the current quarter as these were not permanent rejected reductions within the team.
Adjusted EBITDA for the third quarter of 2023 cause a loss of 271000 compared to a gain of 75000 for the same period of 2022.
It's worth noting that 264000 in the severance accrual was not adjusted out of the current quarter. As these were not permanent rejecting reductions within the team.
Turning the company's liquidity and capital resources as of September 30th 2023, The company had cash and short term investments and appointed U S. Treasuries that totaled $8 9 million. That's currently on deposit at Citibank and capital one.
Speaker 4: Training the company's liquidity and capital resources. As of September 30th, 2023, the company had cash and short-term investments in the form of US Treasuries. The total of 8.9 million is currently on the positive city bank in capital one. Working in capital defined as current assets, minus current liabilities of 8.1 million. Total assets of 22.4 million. And stockholders equity of 17.1 million.
Working capital defined as current assets minus current liabilities are they play 1 million total assets of 22.4 million and stockholders equity of $17 1 million, it's worth noting that the U S. Treasuries will mature in December with a weighted average rate of five 1%.
Speaker 4: It's worth noting that the U.S. Treasury's will mature December with a weighted average rate of 5.1%.
Speaker 4: The company has a $2 million revolving credit facility with Citibank that is secured by collateral accounts. There are no amounts outstanding under this facility and the facility was not utilized during the quarter.
The company has a $2 million revolving credit facility with Citibank that is secured by collateral accounts. There are no amounts outstanding under this facility and that facility was not utilized during the quarter.
Speaker 4: Turning now to our internal initiatives. Our third quarter continue to maintain a focus on improving our operational effectiveness and ensuring that we have the proper team and foundation in place to achieve a justity but a neutral without compromising the necessary investment in the business.
Turning now to our internal initiatives.
Third quarter continued to maintain a focus on improving our operational effectiveness and ensuring that we have the proper team and foundation in place to achieve adjusted EBITDA neutral without compromising the necessary investment in the business.
Speaker 4: As mentioned in earlier remarks, we continue to leverage our cost structure, which went adjusted for severance and proved six points versus the same period last year, as well as improvements over the last three quarters.
Mentioned in earlier remarks, we continue to leverage our cost structure, which when adjusted for severance improved six points versus the same period last year as well as improvements over the last three quarters during.
Speaker 4: During the prior quarter, we also discussed the early efforts regarding the formalization of our channel partner program, and I'm happy with the results that we are seeing. As Brian mentioned during the quarter, we announced the hiring of David Juergens as our head of channel and technology alliances. He is not wasting any time in his efforts to activate his network and securing discussions with potential partners. He has already attended key trade shows in Miami and Las Vegas to further expand his early conversations.
During the prior quarter. We also discussed the early efforts regarding the formalization of our channel partner program and I'm happy with the results that we're seeing as Brian mentioned during the quarter, we announced the hiring of David Jurgens as our head of channel and technology alliances and he's not wasting any time in its efforts to activate as network and securing discussions with potential partners is all.
Already attended key trade shows in Miami and Las Vegas to further expands early conversations. We are also ready to go live with our new CRM platform, we will be Onboarding, new partners conducting deal registration as well as providing our partners with the need of collateral for their success.
Speaker 4: We're also ready to go live with our new PRM platform, where we will be onboarding new partners, conducting deal registration, as well as providing our partners with the needed collateral for their success. As Brian mentioned, I work with David at Silence and I've seen what he can do to build and deliver on a channel program.
Brian mentioned I worked with David at silencing and see what he can do to build and deliver on our channel program.
Speaker 4: In consideration to our expense management, we will continue to improve the ratio of our operate expenses to revenues. We continue our progression towards adjusted even in neutral in 2023.
Consideration to our expense management will continue to improve the ratio of our operating expenses to revenue as we continue our progression towards adjusted EBITDA neutral in 2023.
Speaker 4: We will continue to implement disciplines that will improve our expense ratio by approximately 800 basis points versus 2022, maintain our focus on gross margin performance in 90 and 91 percent, while continuing a fundamental shift in our expenses towards funding sales and marketing initiatives. In closing, we are committed to the continued improvement of our corporate performance. I'll now turn the call over to the operator to take your questions.
We will continue to implement disciplines that will improve our expense ratio by approximately 800 basis points versus 2020 to maintain our focus on gross margin performance in 1990, 1%, while continuing a fundamental shift in our expenses towards funding sales and marketing initiatives in closing we are committed to the continued improvement of our corp.
But performance I'll now turn the call over to the operator to take your questions.
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And then to your question.
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For participants using speaker equipment, it may be necessary to pick up your sense at Stifel pacing restyle Keith.
Speaker 1: The first question we have is from Mark Gondal of Northland Securities. Please go ahead.
The first question, we have is from Mike Grondahl of Northland Securities. Please go ahead.
Hey, guys.
Speaker 5: First question, I think you said that you saw an 18% increase in average price.
First question I think you said that you saw an 18% increase.
And average price.
Per scan year over year.
Speaker 5: Could you just explain that a little bit? Is that driven by some price increases? Is it driven by some newer clients? Like maybe this...
Could you could you just explain that a little bit.
Is that driven by some price increases is.
Is it driven by some newer clients like maybe this.
Speaker 5: real estate area where the amount you get per scan is a lot more than the average book. I'm just trying to, in my head, wrap it around an 18% increase in the average scan price.
Real estate area, where we're the amount you get per scan is a lot more than the average book I'm just trying to in my head wrap it around an 18% increase in the average price.
Speaker 4: Yeah, Mike, Jeff here. So, this is an initiative and a process we've been going through well over the last year, you know, as, you know, Brian and Chris have, one, been working with, you know, existing clients, but we've brought those contracts up to renewals both at, you know, the lower end of the spectrum, including the whales that we have in the queue, and addressing those legacy prices, prices that, you know, shouldn't have been written in the first place.
Yeah, Mike Jeff here. So this is an initiative and are in a process, we've been going through well over the last year, you know as you know, Brian and Chris <unk> been working with existing clients, but we brought those contracts up for renewals both at you know.
The lower end of the spectrum, including the wells that we have in the queue and addressing those legacy prices prices that it shouldn't have been written in the first place.
Speaker 4: And so as we start to anniversary and see the traction on this contract updates, that is the effective impact to our average price per scan.
And so as we start to anniversary and see the traction on this contract updates that is the effective impact to our average price per scan.
Yeah, and Mike, we're certainly increasing pricing on new clients. So it's not just that we're in.
Speaker 3: And Mike, we're certainly increasing pricing on new clients, so it's not just that we're doing price increases on existing. We are continually pushing the pricing. We think that because we are, I think, so easy to use, and the way we're looking at it, we're more than just fraud prevention. We're actually a way to gain more clients, and I think a good example of that
Doing price increases on existing and we are continually pushing the pricing.
We think that because we are vicki so easy to use and the way we're looking at it we're more than just fraud prevention, we're actually.
The way to gain more clients.
And I think a good example of that is due to.
Speaker 3: Just today, my team was talking to one of those two regional pilots that we had talked about. And their goal when they started, when they used us there for their online applications, they hope to increase customer conversion.
Just today.
My team was talking to one of those two regional pilots that we had talked about in their goal when they started when they used us for their online applications. They hope to increase.
Customer conversions by 2%.
Speaker 3: the words that used were ecstatic because they were actually seeing customer conversions increased by 20%. So when you think about the fact that we're not just cutting fraud, but we're also adding clients with a very high LTV, that's why we're certainly pushing pricing. We're more than just fraud prevention. We're customer acquisition. Good, that's...
The words, they use we're ecstatic because they're actually seeing customer conversions increased by 20%. So when you think about the fact that we're not just cutting fraud, but we're also adding.
Clients with a very high L. T V. Yeah, that's probably we're certainly pushing pricing were more than just fraud prevention where customer acquisition.
Good that's great.
And in it.
Speaker 5: If SAS revenue grew 18% and pricing was up 18%.
If SaaS revenue grew.
Per cent and pricing was up 18%.
Speaker 6: Am I correct in seeing kind of volume Ladish, is that because maybe some you lost a couple customers because you tried to raise price that that you know what? I mean, they they didn't want to pay more. I'm just trying to understand volume and price a little bit, you know, I'd say that if I look at overall
Am I correct in saying kind of volume flattish is that because maybe some you lost a couple of customers. Because you tried to raise price that that you know what I mean, they they didn't want to pay more I'm, just trying to understand volume and price a little bit you know.
Say that.
If I look at overall.
Speaker 3: certain things were up and it really depends on the region or the industry that you're looking at.
Certain things were up and it really depends on the region or the industry that they're looking at.
Speaker 3: If I look year over year for the full year I should say, not so.
If I look year over year for.
For the full year I should say no. So.
Speaker 6: First nine months of the year versus the first nine months of last year. Retail is up about 9%.
First nine months of the year versus the first nine months of last year retail is up about 9% and that's a really mixed bag electronics are flat.
Speaker 6: And that's a really mixed bag. Electronics are flat. Some of the specialty women's apparel retail are down as much as 30%.
You know some of the specialty women's apparel retail are down as much as 30%.
Speaker 6: And we also now have an increase over the same period of like 16% increase in retailers who are using us. So I think a lot of it really depends on these little legacy customer where some of that pricing, like Jeff said, I'll never should have been written because it was done so, so long ago and we're still trying to bring them up.
You know and we also now have an increase over the same period is like 16% increase in retailers, who are using us. So I think a lot of it really depends on is it a legacy customer where you know some of that pricing like you know like Jeff said almost never should've been written because it was done so so long ago when we're still.
China bring them all banking is an area that that is definitely growing for us, but we look at two of our largest banks and their volumes are up as they use that some new places within the bank went up 28% of the almost is over double.
Speaker 6: Banking is an area that is definitely growing for us. If I look at two of our largest banks, their volumes are up as they use us in new places within the bank, one up 28%. The almost is over double.
So.
Speaker 6: Again, mixed bag, because some transaction volumes are up, but it might be somebody who's using us purely for parsing the data. So, even though the volumes aren't up, it doesn't have a huge impact on revenue, because you can't charge as much for pure parsing as you do for...
Again mixed bag cause some transaction volumes are up but it might be somebody who's using a purely for pricing data. So even though the volumes arent up it doesn't have a huge impact on revenue because you can't charge as much for pure pricing as you do for them.
Speaker 3: both parsing and filling out the application and cross prevention.
Both parsing and filling out the application and fraud prevention.
So.
Speaker 5: Little bit of both. And then he just lastly, how do you feel about the pipeline? New cut.
Little bit of both with that and they got it and then just lastly, how do you feel about the pipeline new customers.
Speaker 3: I am it's it's funny you know we had a board meeting today we were talking about that a lot you know I think that you know we have said pretty much all year that this was going to be somewhat of a growth year for the new sales team and that we expected them to start bringing things in in
It's it's funny, we had a board meeting today and we were talking about that a lot. You know I think that you know we have said pretty much all year that this was going to be somewhat of a growth year for the new sales team.
And that we expected them to start bringing things in in the back half of the year I can't get there definitely definitely doing I get up I look at you know just last quarter. We closed 27 age restricted places nine title companies in it.
Speaker 3: the back half of the year. I think that they are definitely, definitely doing that. You know, if I look at, you know, just last quarter, we closed 27 age.
Speaker 6: restricted places, nine title companies in addition to that software company that should hopefully get us to a bunch more. We did an online survey company, an online therapy company, another new auto finance company, a handful of automotive dealerships in addition to the ones brought into us by our resellers.
Dish into that software company that should hopefully get us to a bunch more we did an online survey companies therapy company and a new auto Finance company a handful of automotive dealerships. In addition to the one's brought into us.
By our resellers.
So.
Speaker 3: between what I'm already seeing and the pipeline, I think that the team is making good on what we said and what we anticipated and planned for. Got it.
Between what I'm already seeing and the pipeline I think that you know the team is making good on what we said and what we anticipated and planned for.
Got it hey, thank you.
Thanks, Mike.
Speaker 1: The next question we have is from Rudy Kissinger of the IDIBITAN. Please go ahead.
The next question, we have is from Rudy Kisner of D. A Davidson. Please go ahead.
Yeah.
Speaker 6: Great, thanks for having my question. I just want to clarify Jeff on the R&D, he's in those 395,000 of severance, but only 131,000 you pack out for just you go.
Hey, great. Thanks for taking my question I, just wanted to clarify Jeff on the R&D users and there was 395000 of severance, but only 131000 you back out for adjusted EBITDA.
That's correct Yeah, there was only one position that ultimately we didn't replace.
Speaker 4: That's correct. Yeah, there was only one position that ultimately we didn't replace. The rest was a recalibration and an uptick in the skill sets of that team.
The rest was a recalibration and an uptick in the skill sets that team.
Okay got it.
Speaker 6: That's helpful. Brian , it sounds like you just mentioned quite a few deals that were closed in the quarter, but it seems like these are smaller deals. I guess, what was the average contract, ACV, of those deals signed in the quarter? And did you sign any larger deals in the quarter that could turn into six-figure customers?
That's helpful Brian.
Brian It sounds like you know you just mentioned quite a few deals that were closed in the quarter, but it seems like these are smaller deals I guess what was the you know average contract in a C. V of those deals signed in the quarter and did you sign any larger deals in the quarter that that could turn into.
Six figure customers are now.
Speaker 6: We, you know, what I'd say is part of our issue is, yep, I'm answering a few parts. Some of these could be rather large because auto finance company can be pretty big. I think the software company that provides basically the backbone for most of the small and mid-sized title companies could be very big.
We you know what I'd say is part of part of our issue is yep, Yeah I'll answer it in two parts. Some of these can be rather large. He says you know auto finance company. It can be pretty big I think the the.
The software company that provides basically the backbone for <unk>.
Most of the small and midsized title companies could be very big and you know we talked about the number two title company in the country. So we've got a lot of things that I think are potential.
Speaker 6: You know, we talked about the number two title company in the country, you know, so we've got a lot of things that I think are potentially be very big. The other thing is a lot of our very, very large clients, which it's almost where that's where we're always sort of have to show people, don't want to be discussed.
Potentially very big the other thing is a lot of our very very large clients rich its almost where that's where we're always sort of have to show people.
Don't want to be discussed.
At all.
Speaker 6: So I can say that I am very happy with the things that we've announced. I'm very happy with what the team is doing. And I think that as we said, we were building a lot into the second half of the year, continued growth going into, I look at the pipeline, what we're doing, what the assessing programming is doing.
So.
I can say that I am very happy with the things that we've announced I'm very happy with what.
The team is doing.
And you know I think that you know as we said we were building a lot into the second half of the year you know it.
Continued growth going into you know I look at the pipeline.
You know what we're doing.
With the sales team is bringing in.
Very very very robust. They also combine that with what you know Jonathan and team have done.
Speaker 3: very, very, very robust. Then I also combine that with what Jonathan and team have done.
Speaker 6: Now we can go out and in two seconds white label our product to match what somebody who wants to make their product look like in the digital world. It can be installed with absolutely almost no work, just a redirect on the URL. Those are the types of things that speed up deals because it's basically almost turning what was a major integration into an almost near no integration.
Yeah now we can go out and in two seconds White label, our product to match, what somebody who wants to make their product looked like in the digital world. It can be installed with absolutely no work just a redirect on a U or L. A those are the types of things that speed up deals because it's.
Acyclic, it's turning what was a major integration into an almost near no integration.
Speaker 3: you know, on boarding. So yes, I would say that we have.
You know onboarding, so, yes, I would say that we have.
Speaker 6: Okay. And then on the two Southeast regional banks, it seems like those deals have continued to push quarter after quarter. Are those pilots generating revenue? And if not, when do you think those two deals will start generating revenue? And then just lastly, sneaking two-in-one here, just what is your expectation for the seasonal strength in Q4 and scanning volumes relative to past years?
Okay and then.
On the two southeast regional banks it it seems like those deals have continued to push quarter after quarter or are those pilots generating revenue and if not when do you think that's two deals to start generating revenue.
And then just lastly.
Sneak in two in one here just what is your expectation for the seasonal strength in Q4 scanner volumes relative to past years.
Speaker 3: So two parts, they certainly should start generating revenue in Q1 at the absolute latest. I mean, like we said on the call, they are both...
So two parts they certainly should start generating revenue in.
In Q1 at the absolute latest I mean like a it's like we said on the call.
They are both blown away by what they're seeing you know they they both told us that they were just getting destroyed by fraud.
Speaker 3: blown away by what they're seeing. You know, they both told us that they were just getting destroyed by fraud. And now for both of them, we're not only stopping that fraud destruction, but we're also.
And now for both of them are not only stopping that broad disruption, but we're also.
Speaker 6: getting them new customers very quickly. So that's why they're now looking how did we get it all over the place. I think Chris has been very busy with them, trying to figure out how we get to everywhere they want to as quickly as possible. I will say that so far, I'm not seeing any reduction through basically...
Getting them new customers very quickly. So that's why there's now looking how do we get it all over the place and I think Chris has been very busy with that I'm trying to figure out how we get to everywhere they want to as quickly as possible.
I will say that so far I'm seeing I'm not seeing any reduction.
Through you know basically.
Speaker 3: You know, kind of yesterday in terms of volumes from, you know, in terms of the seasonality. So, so far so good.
You know kind of yesterday in terms of volumes from you in terms of the seasonality. So so far so good.
Okay.
Okay, great. Thanks for taking my questions guys.
Thank you.
Speaker 1: The next question we have is on Scott Burke of HC Wainwright, Ducorade.
The next question, we have is from Scott Buck of H C. Wainwright. Please go ahead.
Speaker 7: Hi, good afternoon, guys. Thanks for taking my questions. Brian , I'm curious, do you guys price the product differently when you're doing work with auto or real estate versus the legacy store branded cards? I guess I'm just asking given that I imagine the number of transactions is significantly fewer, but the dollar volumes we're talking about and the risk is significantly higher.
Hi, Good afternoon, guys. Thanks for taking my questions. Brian I'm curious do you guys price the product differently when you're doing your work with auto where real estate versus you know the legacy store credit cards, I guess I'm, just asking given that I imagine the number of transactions is significantly fewer but the dollar volumes, we're talking about it in a risky.
Speaker 6: Yeah, definitely. We sort of have a, you know, maybe three tiers is the way to look at it. Volume being an indicator for, you know.
Right.
Yeah, definitely and we sorted that out.
Yeah, maybe three tiers is the way to look at it volume being an indicator for you now.
Speaker 3: part of the pricing. And then age restricted is always very different than fraud prevention. And then with fraud prevention, it's sort of the size of the fraud potential in there. So, you've got age starting at a lower point.
Part of the pricing and then age restricted is always very different that fraud prevention, and then with fraud prevention, it's sort of the size of the problem.
You know potential in there. So you know you've got age starting at a lower point you.
Speaker 3: you know, for any kind of real volume, then we would in product prevention. And then the lower the volume, you know, the higher the cost, and then the greater the potential loss, the higher the cost.
You know for any kind of real volume than we would in fraud prevention and then the lower the volume.
The higher the cost and then the greater the potential loss the higher the cost.
Speaker 7: Okay, great, that's helpful. And I'm curious what, obviously, the business has changed quite a bit since pre-COVID in terms of diversification. How much of a transaction volume is still coming from a legacy store brand new card business?
Okay, Great. That's helpful and I'm curious what you know obviously the business has changed quite a bit since kind of pre COVID-19.
In terms of diversity diversification, how much of our transaction volume is still coming from kind of a legacy store branded card business.
Speaker 3: There's definitely the majority of it is still there. Probably, you know.
There's definitely the majority of it is still there probably you know.
Speaker 3: 93 to 95% and we're getting our reporting better. So it makes it easier for us to break that out. But my goal is to reduce that as we get into some of these other markets. And certainly other areas that are sort of, recession-proof.
93% to 95% you know, we're getting are reporting better. So it makes it easier for us to break that out.
But you know my goal is to reduce that as we get into some of these other markets and you know it's certainly other areas that are sort of you know recession truth.
Speaker 3: where you still need to authenticate yourself, which is one of the reasons we like some of the other markets that we have been moving into.
Where are you still need to authenticate yourself, which is you know one of the reasons, we like some of the other markets that we have been moving into.
Speaker 7: Great, that's helpful. And kind of as a follow up there, I mean, there's been a fair amount of news regarding, you know, credit tightening over the past several months and, you know, it'd be going more difficult for people to open new credit cards. Have you seen that on your end in terms of transaction volume?
Great that's helpful and kind of as a follow up there I mean, there's been a fair amount of news regarding.
Credit tightening over the past several months and and you know, it's becoming more difficult for people to open a.
New credit cards have you seen that on your end in terms of transaction volumes.
Speaker 3: Yeah, that's like so far not, you know, I think more where I'm seeing changes in transaction volumes, it's because of the retailers themselves is having problems.
No that's like so far not.
Think more where I'm seeing changes in transaction volumes, it's because of the retailer themselves as having problems cause certainly some retailers who are our and then you know again like I said there are some of the retailers that are very much down you know, 5% to 30%, but I'm also seeing other retailers that are.
Speaker 3: because there's certainly some retailers who are up. And then again, like I said, there's some of the retailers that are very much down, you know, five to 30%, but I'm also seeing other retailers that are flat and others that are up about 10%. So, so far we're not, you know, but that is certainly something that I'm keeping my eye on.
And others that are up about 10%.
So so far we're not.
You know, but that is certainly something that I'm keeping my eye on.
Speaker 7: Sure, I appreciate the time guys. It's great. Thank you. Thanks, guys.
Sure well I appreciate the time guys Thats great. Thank you.
Thanks Scott.
Yeah.
Speaker 1: The next question we have is from Daniel H. Mann of Craig Hallam. Please go ahead.
The next question, we have is from Daniel Hickman of Craig Hallum. Please go ahead.
Speaker 5: Hey, this is Daniel on for Jeff Sandree. Just click on the new data product. Any thoughts on pricing and or how that would be priced and any thoughts on the expected top line impact from it?
Hey, this is Daniel on for Jeff can read just a quick one the new data product any thoughts on pricing and or how that would be priced and any thoughts on the expected top line impact from that.
Speaker 3: At this point in time, not yet, you know, but we do look at it as doing a number of things. You know, one is certainly strengthening the existing product.
At this point in time, not yet you know, but we do look at it is doing a number of things.
One is certainly strengthening the existing products.
Speaker 3: But we have talked to many of our existing clients about it. And they have all said that they would find a highly valuable.
But we have talked to many of our existing clients about it and they have all said that they would find it highly valuable.
Speaker 3: So, you know, we could be continuing to work with them. Our first step was to get the data late going. You know, we've got a data scientist who's coming on board who can help us make a lot of sense of it. You know, we've already figured out a few things.
So we continue to work with them. Our first step is to get the data Lake going you know we've got a data scientist is coming on board, who can help us make a lot of sense of it you know we've already figured out a few things that you know we know we can already do but I think you get somebody who really knows how to sift through the information that's going to be even better.
Speaker 3: that we know we can already do, but I think you get somebody who really knows how to stick through the information, it's gonna be even better. But certainly, that's the thing that we're focusing on in early 2024 is to make sure that we get that plan in place. And again, it's gonna be done in collaboration with our clients.
But certainly that's the things that we're focusing on an early.
In early 'twenty 'twenty four is to make sure that we get that plan in place and again, it's going to be done in collaboration with our clients.
Speaker 5: Thanks for the thought and then just on the cost reductions with moving Comfort providers any thoughts on the potential cost reductions there with that amount to
Thanks for that and then just on the cost reduction or moving compromise any thoughts on the potential cost reductions there what that amounts to.
Speaker 6: me moving off of one, you mean the cloud providers?
Me and moving off of one you mean the cloud providers.
Speaker 3: Like yeah, I say that my like
Hum like yeah.
I say that in my life.
Speaker 8: CTO and Edith DevOps are promising me the sun in the moon, but I would expect something in the under-order of at least 20%.
T O and I had a dev ops, they're promising need the sun and the moon, but I would expect something on the order of at least 20%.
Thanks for that and then that's all I had thanks.
Thank you.
Speaker 1: We are now for the questions at this time. I would like to turn the floor back over to Brian Lewis for closing comments.
There are no further questions at this time I would like to turn the floor back over to Brian Lewis for closing comments.
Speaker 3: So, thank you all for joining us today. You know, hopefully, as you can see, we're focused on making changes, positioning resources, and growing our market presence and penetration. I think all of our efforts reflect a common theme.
So thank you all for joining us today, hopefully as you can see we're focused on making changes.
Positioning resources and growing our market presence and penetration.
I think all of our efforts reflect a common theme, we're continuing to work with new and existing clients to expand the ways. We can stop identity theft without proven technology solutions right and in addition to that showing them. How we can help them acquire more customers faster and.
Speaker 6: continuing to work with new and existing clients to expand the ways we can stop identity theft with our proven technology solutions. And in addition to that, showing them how we can help them acquire more customers fast.
Speaker 3: And we take between the two of those things, the best is yet to come as we solidify our reputation as an industry leader in both physical and digital identity. So with that, thank you and good night.
We take the between the two of those things the best is yet to come as we solidify our reputation as an industry leader in both physical and digital identity. So with that thank you and good night.
Speaker 9: That concludes today's conference. Thank you for joining us. You may now disconnect your lines.
That concludes today's conference. Thank you for joining US you may now disconnect your lines.
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